A public company instituted a clawback policy.What does this mean?
A)The company can require the CEO and CFO to reimburse the company for any bonus or profits they received from selling company stock within a year of the release of flawed financials.
B)At least once every three years,companies must take a nonbinding shareholder vote on the compensation of the five highest-paid executives.
C)The company is prohibited from expelling shareholders unless the firm pays a fair price for the minority stock and the expulsion has a legitimate business purpose.
D)The company has decided that the compensation level of its executives is not in the company's best interests,so it reduces all executive pay levels by a certain percentage.

Question

Quizplus · Accepted Answer

A clawback policy allows a company to recover compensation or benefits paid to an executive if certain conditions occur, such as the release of flawed financial statements. In this case, answer A describes a specific type of clawback policy where the CEO and CFO may be required to return bonuses or profits received from selling company stock within a year of the release of flawed financials.

A Public Company Instituted a Clawback Policy